Social capital in the workplace: evidence on its formation and consequences

The existence of social ties between co-workers affect many aspects of firm and worker behavior, such as how workers respond to a given set of incentives, the optimal compensation structures for workers at different tiers of the firm hierarchy, and the optimal organizational design for the firm. This paper presents evidence on the social capital in one particular firm, as embodied in the friendship ties among its workers. We describe the structure of the friendship network as a whole and present evidence on the determinants of social ties. Finally, we review evidence from a field experiment we conducted in the firm to highlight one particular mechanism through which social capital significantly affects worker performance.